Restaurant Patrons Splurge for an Experience

It’s true: Fine dining is making a comeback in the restaurant world. But that doesn’t mean people aren’t still scouring high and low for deals — at the expense of your bottom line.

In the last issue of VIBE, we took a look at increased traffic to fine-dining establishments, as reported by market research firm NPD Group. Warren Solochek, Vice President of Client Development at NPD Group, believes this trend is fueled by patrons who view dining out as a special occasion, complete with unique offerings unavailable at home, knowledgeable and talented service, and, of course, high-quality food and beverage.

But even though many guests may choose to dine out, they still might trade down once inside your establishment, no matter on what end of the price spectrum it falls. That’s because, while people crave experiences, they still want to get the most for their money.

Take, for example, one surprising trend Solochek and NPD Group found in their CREST Survey, a daily survey of 2,000 consumers from across the country in regards to their on-premise dining habits: Whether they’re frequenting casual or fine-dining establishments, there is a growing propensity for patrons to simply order tap water. This doesn’t mean they’re just turning down the always-important beverage alcohol; they’re also passing up coffee, tea, soft drinks or sparkling water — those less-expensive items that quickly add up for your bottom line.

“People still want to go out to restaurants because they still enjoy the experience, but I think given the current economy, the vast majority of Americans are a little more concerned and aware of how they want to spend,” Solochek notes. “And one of the ways for them to better manage their check is to just order tap water.”

Much of NPD Group’s research shows people are discouraged by rising beverage prices in restaurants, Solochek says. They know, for example, what it would cost to buy a soft drink from the grocery store, and so they can’t justify paying exorbitantly higher prices in a restaurant. Instead, they’ll just stick with basic, zero-cost tap water.

In NPD Group’s research, they’ve asked people who have cut back on beverages why they’ve done so. “The No. 1 reason they tell us is that they feel beverages have just become too expensive. I think that applies to non-beverage alcohol, and to a certain degree, it will also apply to beverage alcohol,” Solochek says.

“People make a conscious decision of how much they’re willing to spend for a cocktail, glass of wine or glass of beer, and if it’s over a certain price threshold, they just go, ‘Forget it, I’m not going to do it.’ It’s not that they’re necessarily going to say, ‘I’ll get iced tea in place of wine.’ Rather, it’s, ‘I’ll just get water.’”

That means they’re still willing to come into your restaurant and spend top dollar for the main dish they desire, but they’ll make cuts wherever else possible.

Beyond beverage alcohol and other drinks, this trend extends to appetizers and desserts as well — “all those non-center-of-the-plate things,” Solochek says.

One area in which appetizers and desserts are growing in popularity, however, is at restaurants that “bundle” meals by offering, for example, an appetizer, main dish and dessert at a set price. This is often done to attract new patrons who wouldn’t ordinarily try a restaurant or who may deem it out of their regular price point.

“Those kinds of bundling promotions are becoming more prevalent because operators want their food to seem like it’s a better value,” Solochek says. “It’s a good way to get people in the door, and given the fact that the economy isn’t expected to improve a whole lot this year, I would expect more restaurants will do it.”

But while these deals might seem perfect for getting brand-new patrons to become regular guests, there’s one major downfall NPD Group found in its research: When looking specifically at guests who came in for the promotion, they are far less likely to purchase beverage alcohol than those who did not come in for the promotion.

As these bundling packages become more and more prevalent, it’s important to remember that these guests are coming in for the value you offer. They have a set price in mind to spend during this experience, and if that requires them to stick with the free tap water, they’re going to do it. If considering offering such deals, it’s important to analyze whether this deal-seeking customer is the one to target, or if you should readjust your vision to reach the drinks-buyer.

Of course, suggestive selling might help no matter what, Solochek notes; a talented server can provide the slightest push to get a wavering customer to dive right in to that specialty drinks list. But it’s important to know who your guests are, what they desire and how much they’re willing to spend.

It’s this kind of information that Solochek will discuss at the VIBE Conference, held in Las Vegas March 13-14. During his workshop, “The Mixology of Consumer Beverage Choice,” Solochek will present the latest NPD Group research: a never-before-seen look at why guests purchase what they do, from brands to bottles to, of course, price points. He’ll explain the process behind patrons’ decision-making — and show you how to capitalize on it.